Benefit of abatement under the category of Erection, Commissioning or Installation, Service Tax

[Vijay Chitte]

Sub: Service tax on works contract X received a works contract for installation of Furniture. X will provide the services including furniture, as a full of works contract. X cannot give a separate invoice for materials and installation charges, due to, he will out of the excise limit (i.e. 1 crore) and he had to pay excise duty on the materials, He will raise only works contract invoice, because, he will safe from excise duty and only service tax will be charged. Question: 1)As per above transaction, my interpretation is true? 2) Can X will get the benefit of abatement up to 67% under the category of Eraction, Commissioning or Installation charges? 3)What should be the suitable transaction as per your view?

Posts / Replies

[Madhukar N Hiregange]

The important fact would be wherther he is covered under erection. In a WCT the manufacture of movable excisable goods would be liable for CED( if over 1 cr) as well as WCT. If he fall within the catgeory then the 67% exemption would be available.

[Surender Gupta]

I doubt that by merely by issuance of an invoice, any tax liability is determined. The levy of any tax / duty is independent to the manner you are raising invoices. From the Finance Bill, 2007 you can safely interpret that work contract was not taxable at all before that.